BANGKOK, Aug 20 (Reuters) - The Thai government will open a
tender to sell 753,000 tonnes of milled and unmilled rice from
its stocks next week, the Commerce Ministry said on Monday, in a
bid to reduce its stockpile of the grain before a new buying
scheme is launched in October.

Thailand's populist scheme to intervene in rice markets by
paying farmers 15,000 baht ($470) per tonne for paddy, compared
with around 9,000 baht in the open market, has made the grain so
expensive few can afford to buy it.

Prices in Vietnam and India are around $170 per tonne
cheaper than equivalent Thai grades, which have been pushed up
by the high government intervention price since October.

As a result, the Thai government holds record stocks
equivalent to 17 million tonnes of paddy, or around 10 million
tonnes of milled rice.

"The tender will be held on August 28 and the rice can be
sold in both the domestic and export market," the ministry said
in a statement.

Commerce Minister Boonsong Teriyapirom, affirming recent
comments, told Reuters the government had sold 2 million tonnes
of rice to China and was in talks to sell another 1 million
tonnes to Indonesia.

"We hope Indonesia will agree to buy from Thailand very
soon," Boonsong said.

However, traders and industry officials said the agreements
with China and Indonesia were just memorandums of understanding,
preliminary offers to buy or sell rather than definite contracts
with exact dates for payment and delivery.

Government officials, who declined to be named because of
the sensitivity of the subject, confirmed the comments.

Exporters have complained for months that their business has
dwindled because of uncompetitive Thai prices. Some have quit
the business and others have become more active in neighbouring
countries such as Cambodia.

"China has bought a lot of rice from Vietnam since the first
half of the year and Indonesia is interested in buying from
Vietnam due to its cheaper prices. There's no point buying from
Thailand," said Chookiat Ophaswongse, honorary president of the
Thai Rice Exporters Association.

Last week, Indonesia signed an option with Vietnam for
500,000 tonnes of rice.

Another Bangkok-based traders said: "The government may have
told the public it has sold that rice, but we have found, to the
contrary, that there is no loading activity at all and there is
no activity on the rice market, which is strange."

The Thai government normally asks private exporters to
manage deliveries for government-to-government deals.

Some traders said the government appeared to be trying to
convince the public it could manage its stocks, at a time when
it is facing strong criticism over its expensive policy, which
opposition lawmakers may target in a possible censure debate in
parliament.

The government has sold only 240,000 tonnes of rice to Ivory
Coast. It has given no details on price or terms of payment for
that deal in July.

The government is determined to maintain the intervention
policy and plans to set aside another 260 billion baht ($8.25
billion) for the next phase in October, when the next main crop
will be harvested, Boonsong said.

"The National Rice Committee is expected to meet this week
to talk about the intervention details and we plan to submit the
260 billion baht budget request for cabinet approval soon
after," he said.
($1=31.5250 Thai baht)
(Editing by Alan Raybould and Clarence Fernandez)

Trending On Reuters

Markets

The BSE Sensex posted its worst monthly fall in more than two years, raising concerns a strong rally that saw indexes surge in the fiscal year was waning due to concerns about stock valuations and a more gradual economic growth. Full Article